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TMI Blog2019 (6) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... in his PAN card. AO also confirms that Mr. D.R. Shah has filed his return of income for that particular assessment year. This confirms the identity of Mr. D.R. Shah. The genuineness of the transactions is proved by the fact an MOU was entered and that in each of the bills/invoices raised, the details of services rendered, the details of transactions for which commission was paid, was mentioned. Disallowance in question is bad in law. We direct the A.O to allow the claim of assessee of payment of commission. In the result, the ground of the assessee is allowed. Disallowance of Written off of bad debts - HELD THAT:- Assessee was not able to substantiate to the revenue authorities, as to whether the amount, in question, was taken into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined this claim and came to the conclusion that the assessee could not prove the genuineness of the claim and identity of the commission agent. He further observed that the expenses were booked on the last day of the financial year 2008-09 by way of journal entries. He was of the view that the assessee had inflated expenses to evade taxes. Hence he disallowed the entire claim of commission payment of ₹ 38,00,000/-. Furthermore, the claim of assessee of writing off of bad debts of ₹ 6,35,158/- was also disallowed for the reason that the assessee could not produce the requisite ledger for the year ending 1990 on the ground that, these are very old debts. The A.O held that the nature of credit, steps taken to recover the debts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign parties and purchases made of these goods by the Indian customers. He submitted that the following evidences were filed before the A.O in support of the claim of genuineness of commission payment: (a) Copies of the MOU with Mr. D.R. Shah (b) Copy of PAN card of Mr. D.R. Shah (c) Copies of bills/debit notes raised by the parties mentioning the name of Mr. D.R. Shah (d) Money receipts issued by Mr. D.R. Shah and (e) Certificate issued by banker confirming payments made to Mr. D.R. Shah. 5. On the findings of the revenue authorities that they could not find Mr. D. R. Shah at the address as provided, he submitted that the assessment of Mr. D.R. Shah was completed by the Department and that under those circumstances, his existenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made every effort to trace Mr. D.R. Shah at the address furnished by the assessee but it failed to do so. He pointed out that the notice issued u/s 133(6) at the address given by the assessee had been returned back and the assessee did not produce this Mr. D.R. Shah for examination before the Assessing Officer. He submitted that the assessee could not justify the payment of commission by specifying the services rendered by Mr. D.R. Shah. He submitted that 50% of the commission received was shown as payments without any basis and is not genuine. He further pointed out that the amount, in question, was outstanding at the end of the year and under those circumstances, the findings of the ld. CIT(A) has to be upheld. 8. On the issue of bad d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission income of ₹ 64,08,867/- for services rendered by her to the foreign parties. She had availed similar issues by entering into a MOU with Mr. D.R. Shah. The nature of services is mentioned in the MOU. In our view, the assessee has furnished sufficient evidence in support of its claim that commission has been paid to Mr. D.R. Shah for services rendered. The main objection of the Revenue is that Mr. D.R. Shah could not be found at the address provided by the assessee during remand proceedings, during the month of July 2015. The transactions, in question, relate to F.Y 2008-09 while so, a verification during the month of July 2015 cannot give the correct fact as to whether Mr. Shah was at that address. He would have shifted. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Hon'ble Delhi High Court in the case of Mohan Meakin Ltd. vs. CIT (2012) 348 ITR 109 (Delhi HC) held as follows: "The assessee advanced sums to a supplier in order to obtain regular supplies. As the supplier failed to deliver the goods or to refund the advance, the assessee claimed the loss as a bad debt u/s 36(1)(vii). The AO rejected the claim though the CIT (A) allowed it. On appeal by the department, the Tribunal upheld the stand of the AO on the ground that the conditions of s. 36(2) were not satisfied. In the High Court, the assessee conceded that s. 36(1)(vii) was not applicable but pleaded for the first time that the loss should be allowed u/s 37(1) as a business loss. HELD upholding the claim: (i) U/s 28 r.w.s. 29, comput ..... X X X X Extracts X X X X X X X X Extracts X X X X
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